Wednesday, December 05, 2007

New working paper

Why government hurts the poor: the case of Indonesia's rice protection

Written with M. Chatib Basri. To be presented in AEP meeting, Tokyo 7-8 Dec, 2007.


Indonesia is a country very much dependent on rice. It has consistently been a rice net importer for a long time, except for a brief intermittent of self-sufficiency in late 1980s. Yet, resistance to importation is always strongly pronounced. As a result, government policy tends to bias against the majority net consumers of rice, a group dominated by the poor. This paper offers two explanations on the rice protection in Indonesia. First, it shows that the demand for protection is likely to be affected by the movement of real effective exchange rate. Second, it uses the logic of collective action framework to explain why the government opts for hurting the poor. In particular, the paper asserts that the lobby of net producers is stronger than that of net consumers, because the latter group relatively lacks of incentive to fight.

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